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Sunday, June 29, 2008

What price a moral life?, by Suzy Freeman-Greene - The Age - 21st June 2008

In a world with so much need, why is it that many of Australia's richest are the stingiest when it comes to giving? Surely it is not enough to look after only yourself and your own family.

David Morawetz believes the biggest lottery in life is where you are born. "We are all born and have no choice where or when," he says. "We all die and have no choice where, when or how. To me, that makes us all equal." Surely then, those lucky enough to be raised in relative wealth should do what they can to make the world a fairer place.

Morawetz, a Melbourne psychologist, was struck by this thought when backpacking through India more than 40 years ago. He recalls seeing a baby whose arms had been chopped off so she could beg more effectively. Though not a religious person, he thought: "There but for the grace of God go I."

He became a development economist, later switching to psychology. Then, in 2001 his father died, leaving him far more money than he had ever expected. He decided to use some of this money to tackle injustices. Here was a chance to put his egalitarian beliefs to the test.

Today, Morawetz gives away more than 50% of his taxable income. Through his Morawetz Social Justice Fund (a sub-fund of the Melbourne Community Foundation), grants go to groups building wells in Ethiopia, schooling girls in Nepal and training indigenous leaders in Australia, to name a few. Priorities in developing countries are ensuring safe drinking water and educating women, with the emphasis on long-term solutions. Over four years, he has given away more than $1 million.

Talking about the fund, it's clear that giving makes him, as well as his recipients, happy. "It feels really exciting, it's a real privilege to have these resources and be able to use them in this way," he says. "It gives me 1000 times more pleasure than, say, buying a yacht … I like to have as much as I need, but beyond that I am not interested in accumulating wealth. I am much more interested in what I can do with the money."

But while the "agnostic humanist" Morawetz sees his ability to give as a privilege, many of Australia's other wealthy are giving little, if any, to charity. A study released this year found that 40% of the richest Australians gave minimally or not at all. In the decade to 2005, the income of our top 5% of taxpayers grew 36% in real terms. Yet the amount of taxable income they gave to charity grew from just 0.36% to 0.45%.

"Making substantial donations still constitutes an exception rather than a norm for the wealthy," noted the authors of the Queensland University of Technology report. Indeed most of the affluent give only slightly more as a proportion of their income than poorer folk. (The report defined the wealthy as those with taxable personal incomes of more than $100,000 or assets of more than $1.2 million, apart from the family home.)

Internationally, the comparisons are stark. In 2005-6, Australia's ultra-rich (those with a personal taxable income of $1 million-plus) gave away 1.39% of their income. A recent World Wealth Report estimated the ultra-rich elsewhere were giving between 3% and 11% of taxable income. Those in the Asia-Pacific led the way, donating 11.8% of their total investment portfolios. Next came those in the Middle East (7.7%) and North America (7.6%).

Obviously, some wealthy Australians give extremely generously. But the Queensland findings matched anecdotal evidence. "Most charity collectors will tell you that they always do better when … doorknocking in those suburbs at the bottom of the socio-economic pile," David Thompson, the chairman of the Roundtable of Nonprofit Organisations, told ABC radio. "It's far tougher at the other end."

Why is this so? Clearly, there's great need, both here and overseas. In the past decade, Australia has become a more divided society. And worldwide, more than a billion people live on less than $US1 a day. Are the rich here greedier or more self-absorbed than elsewhere or is the picture more complex? And what can be done to encourage more of them to give more?

The good news is that Australians in general compare well to their overseas peers when it comes to private giving. On average, Australians give considerably less than individuals in the US (which has a unique culture of philanthropy) but roughly on par with Britain and Canada, and well ahead of France and Germany. In just seven years, giving by Australians has increased in real terms by 58%. In the most recent year measured (to January 2005), 87% of Australians gave a total of $5.7 billion.

Reasons for giving may include religious motivations, social justice concerns, the tax deductibility of donations or a combination of all three. Giving can also be a way of expressing one's identity and values or connecting with the community. According to the authors of the landmark 2005 study, Giving Australia, giving can be seen as a continuum. At one end there's altruistic giving, which is often anonymous. At the other end, there's giving that is reciprocated through a tangible return to the donor.

Australia has about 20,000 organisations with tax-deductible gift status and about 700,000 non-profit groups. Oxfam's supporter relationships manager Andrew Buchanan says that historically groups have fished from the same pool of donors. To go beyond its traditional audience, Oxfam has needed to think more about its supporters' needs.

Oxfam has about 50,000 donors pledging monthly amounts, mostly to its Aware scheme, which funds long-term development projects around the world. Oxfam also has two "less traditional" fund-raising schemes that are popular: Unwrapped and Trailwalker. Unwrapped donors can buy a "virtual" gift for a friend (such as a pig or a well), with the money funding an overseas aid project. Trailwalker is a sponsored team endurance event. Buchanan says frankly that, for most participants, the primary motivation is the endurance challenge, with fund-raising an important byproduct.

While donations to Oxfam have increased annually for the past five years, it's clear that competition for donor money is stiff. And while private giving has been at record levels, the economic downturn is already affecting some charities. The Smith Family recently issued a press release noting that donations to its mid-year appeal were down by an average of 15%, compared with donations last year. The charity's acting chief executive, Paul Henderson, says the high costs of food, petrol and housing are hurting the "mums and dads" who are its traditional supporters. Other local charities have echoed his concerns, pointing out that as donations plateau or fall, there's a greater need for their services, with more people struggling. At the same time, two big natural disasters in our region — the Burmese cyclone and the Chinese earthquake — have further tested donors' generosity. As taxpayers contemplate the financial end of year and charities tout their mid-year appeals, there's a need for the rich to pitch in more.

"There's an argument that those who have more income and more ability to ride out these times … should maybe be a little more generous," observes academic Dr Wendy Scaife, co-author of the QUT study.

Why aren't our wealthy giving more? A key reason often proffered is that Australia has a culture where governments are expected to do more, unlike the US with its mantra of self-reliance and small government. This may be so, but surely there's nothing to stop us helping elsewhere. Around the world, a child dies every three seconds from a preventable disease, notes Buchanan. Microsoft chairman Bill Gates has pledged almost $US30 billion to help eradicate poverty and diseases in developing nations.

And in Australia, says Henderson, the gap between rich and poor has widened. One in seven Australian children now lives in a household without a parent in paid work. When he tells people this figure, he says, they are often staggered. His charity helps kids in poor families by paying for educational costs such as uniforms and books.

Research has found that only one in four dollars donated to non-profit groups is claimed on tax. But Scaife says the wealthy tend to be scrupulous in this area, as most have financial advisers. She stresses it's not that rich people are mean. Rather, there are many who genuinely haven't thought about giving. They may never have been personally challenged by sickness or poverty so lack awareness of these difficulties.

She wants philanthropists to talk more about the joys of giving and thinks the tall-poppy syndrome may inhibit some from doing so for fear of being seen to "big note" themselves.

She speaks also of "psychic poverty": those people who feel they may not be able to afford to give, "when they could probably buy and sell both of us". Some worry they won't be able to maintain their lifestyle. One philanthropist told her of a friend who was concerned he'd need his money when he got older. The philanthropist told him "you could buy four private hospitals with what you've got". She thinks we need to encourage wealthy people to think more rationally about their ability to give.

David Morawetz thinks Australians can be sceptical. Many assume that if they give, the money won't reach its source. He asks three questions of the projects he funds. Does the money get there? Does it make a difference? And is it cost effective? "There are so many magnificent groups out there who are doing work with a resounding 'yes' to these questions," he says.

SEVERAL years ago, he flew to Ethiopia to see a well he'd funded in the village of Hawile-Gazine. Previously, women had walked for three hours a day to collect drinking water from a filthy, stagnant river. Because it was also used as a toilet, children had been dying from diseases such as dysentery. Now, at a cost of just $10,000, about 1000 people would drink clean water. "I believe that we are all brothers and sisters," he told the villagers. "We in Australia have safe drinking water. It is not fair that you in this village did not."

Daniel Petre, a philanthropist and former Microsoft Australia chief executive, has spoken frankly about the need for Australia's rich to give more. "If they gave 10% of their wealth to charity, it would not change their lifestyle at all," he told Business Review Weekly. He has reportedly called on the Government to impose a penalty, such as a death tax, on the ultra-rich who don't give.

Private philanthropy is growing in Australia, but progress is slow. (There are now about 600 prescribed private funds, a tax-effective way of giving large amounts). Some charities say they need to do more to entice the wealthy. The media could also play a role. In our celebrity-obsessed culture, news outlets avoid running too many "downbeat" stories about global poverty or the homeless, for fear of losing readers. Meanwhile, rich people are feted as celebrities themselves. How different would things be if we judged the rich by what they do with their money, rather than how much they have?

Ethicist Peter Singer believes we need to challenge the idea that you can live a morally decent life "just by looking after your own family and not actually causing harm to others". "We need to develop a sense that if we have an abundance, we are actually doing wrong if we don't share it with people who, through no fault of their own, are in the most dire poverty," he has said. Part of the solution, he argues, is to show people how easy it is to make a difference. It would take only a modest proportion of the richest people's wealth to free the world's poorest from shocking poverty.

Singer's is a challenging stance. But in researching this essay I came to realise that I, too, could be doing more to share my relative wealth. The fact is, I don't even notice the $20 a week that is deducted from my pay and given to Oxfam's Aware scheme. And if I'm lucky enough not to notice, then I should be giving more.